BTC at Risk of Sub-$25,000 on SEC Move Against Binance

Key Insights:

• On Monday, BTC tumbled by 5.15% to end the day at $25,730.
• News of US regulators suing Binance and CEO CZ sent BTC and the broader crypto market into the red.
• The technical indicators are bearish, leaving sub-$25,000 in play.

On Monday, bitcoin (BTC) slid by 5.15%. Reversing a 0.18% gain from Sunday, BTC ended the day at $25,730. Significantly, BTC ended the day at sub-$26,000 for the first time since March 16.

A bullish start to the day saw BTC rise to a mid-morning high of $27,136. Leaving the First Major Resistance Level (R1) at $27,411 untested, BTC tumbled to an early evening low of $25,391. The sell-off saw BTC fall through the Major Support Levels and end the day at $25,730.

US Regulators Overshadow Easing Bets on a Fed Interest Rate Hike

It was a busy start to the week. US economic indicators gave investors more reasons to bet on a Fed pause in June. The all-important ISM Non-Manufacturing PMI fell from 51.9 to 50.3 in May versus a forecasted 51.8. Notably, the ISM Non-Manufacturing Prices Index fell from 59.6 to 56.2, with the ISM Non-Manufacturing Employment Index down from 50.8 to 49.2.

Investors eased bets on a June interest rate hike in response to the ISM numbers. According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike fell from 25.3% to 21.2% on Monday versus 64.2% one week earlier.

While the ISM number delivered modest price support, news of US regulators suing Binance and CEO CZ sent BTC and the crypto market into a tailspin. The SEC filed thirteen charges against Binance, CZ, and Binance US.

Charges include the unregistered offer and sale of securities and the misrepresenting trading controls and oversight on the Binance.US platform.

SEC Chair Gary Gensler had this to say,

“Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”

The Day Ahead

It is a relatively quiet Tuesday session. There are no economic indicators from China or the US for investors to consider. The lack of stats will leave the crypto market in the hands of the FED, US regulators, and lawmakers.

Following the SEC move against Binance and CEO CZ, we expect the markets to remain cagey as investors consider the implications on Binance and the broader crypto market. The SEC move came just one business day after the US administration averted a US default.

Notably, the SEC sued Binance after US lawmakers released the Digital Asset Market Structure Draft Bill that aims to deliver regulatory clarity.

With Binance in the news and no US economic indicators to consider, the US Committee on Agriculture will hold a hearing today focusing on the spot trading of digital assets.

The hearing should give investors an early indication of how receptive the Democrats are to delivering regulatory clarity in the interest of innovation and consumer protection.

However, investors should consider SEC and CFTC chatter, SEC v Ripple-related comments, and Coinbase (COIN)-related news.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.11% to $25,758. A range-bound start to the day saw BTC rise to an early high of $25,759 before falling to an early low of $25,727.

BTC Technical Indicators

Resistance & Support Levels

BTC needs to move through the $26,086 pivot to target the First Major Resistance Level (R1) at $26,780 and the Monday high of $27,136. A return to $26,500 would signal an extended bullish session. The crypto news wires should be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $27,831 and resistance at $28,000. The Third Major Resistance Level (R3) sits at $29,576.

Failure to move through the pivot would leave the First Major Support Level (S1) at $25,035 in play. However, barring an event-fueled sell-off, BTC should avoid sub-$25,000 and the Second Major Support Level (S2) at $24,341. The Third Major Support Level (S3) sits at $22,596.

Looking at the EMAs and the 4-hourly candlestick chart (below), the EMAs sent bearish signals. BTC sat below the 50-day EMA ($26,925). The 50-day EMA fell back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, sending bearish signals.

A move through R1 ($26,780) would give the bulls a run at the 50-day ($26,925) and 100-day ($27,058) EMAs. However, failure to move through the 50-day EMA ($26,925) would leave S1 ($25,035) in view. A move through the 50-day EMA would send a bullish signal.